Price controls

Another question from the Opinion Research Corporation:  "In normal times, do you think we can depend on competition to keep prices at fair levels, or is some sort of government control needed to keep prices fair?"

        Competition    Control   DK
1946       66%           30%     4%
1953       68%           27%     5%
1955       63%           32%     5%
1955       65%           30%     5%
1962       43%           43%    14%
1963       50%           38%    12%

That was the last time they asked about "normal times," but they later asked:  "Do you think we can depend on competition to keep prices at fair levels this year, or is some sort of government control needed to keep prices fair?"
 
        Competition    Control   DK

1971       27%           62%     11%
1974       26%           63%     11%

Between 27% and 43% of the public said that there should be price controls in "normal times," a proposition that would get almost zero support among policymakers and professional economists.  Clear majorities supported price control in 1971, and again in 1974 even though price controls had then been in effect for several years and hadn't been very effective in reducing inflation.  

Of course, it's possible that there would be less support for price controls today.  However, I think these results illustrate an important point about public opinion on economic policy:  it can't really be classified as liberal or conservative.  The best term might be "dirigiste":  people think that the government should be more active in regulating "bad" things, whether they involve companies raising prices or workers going on strike. 

Profit

Over a period of about 40 years, the Opinion Research Corporation occasionally asked:

"In [all] industries where there is competition, do you think companies should be allowed to make all [the profit] they can, or should the government put a limit on the profits companies can make? "

The results (* indicates that the question included the words in brackets).

       All they can  limit    DK

1946     61           31       8

1953     65           28       7

1955     66           28       6

1955     67           27       7

1961     62           24      14

1962     61           25      14

1963     53           32      15

1971     55           33      12

1973     48           40      12

*1975    36           55       9

*1976    39           55       6

*1977    39           55       6

*1979    34           60       6

*1981    41           51       8

*1983    43           51       6

*1986    61           31       8

Support for limits on profits rose in the 1970s and early 1980s, before dropping in 1986. The most plausible explanation of the rise is that it was a reaction to the high inflation of that time.  There seems to be no real trend over the longer term--opinions in 1986 were just like opinions in 1946--but unfortunately the question hasn't been asked since then. 

A level playing field

It's often suggested that Americans care more about equal opportunity than people in other nations (see the quotation from Luigi Zingales in my recent post).  You can support this with examples from history--the United States was traditionally a leader in providing public education, although other countries have caught up with us recently, and it still has less educational tracking than most other nations. 

What about surveys?  The 2009 ISSP survey discussed in my last post has one question that directly involves "a level playing field"--whether it's just that rich people can buy a better education for their children.  The other questions, except maybe the one on medical care, are about equal results--helping the poor and unemployed or taking from the rich.  Americans rank 31st among 38 nations on the education question, compared with an average of 32nd on the others (high numbers represent less egalitarian sentiments).  However, there are some nations in which rankings on the education question are substantially different from rankings on the others. 

More likely to see it as unjust

Belgium
Cyprus
Iceland
Denmark
Norway
Sweden

For example, Sweden is 12th most egalitarian on education, an average of 22nd on the others.  With the Scandinavian countries, this is probably because some of the questions involve implicit comparisons to the present; since the government already does a lot to equalize conditions in those countries, people are less likely to be in favor of doing more.  I don't know enough about Belgium or Cyprus to offer a guess about why they are on the list.

Less likely to see it as unjust

South Korea
Russia
Estonia
China
Taiwan
Japan

All of the East Asian nations in the survey show up on this list.  For example, people in South Korea are fairly egalitarian overall (an average of 12th on the other questions), but don't have a problem with rich people buying better education for their children (32nd).

In any case, Americans don't seem to make much distinction between equal opportunity and equal results--by international standards, we (and Anglo-Saxon settler societies more generally) don't care much about either one.

Americans and Equality: Not so exceptional

In my last post, I wrote about a "recent Pew survey" of twenty-seven nations in which Americans were much less favorable to income redistribution than people in any of the other nations.  That survey turned out to be from the International Social Survey Programme in 1999. 

The ISSP had another survey on social inequality in 2009, and it included a wider range of questions on redistribution.  Specifically:
1.  Agree or disagree that "differences in income in [country] are too large."
2.  Agree or disagree that "it is the responsibility of the government to reduce differences in income between people with high income and those with low incomes." [the 1999 question]
3.  Agree or disagree that "the government should provide a decent standard of living for the unemployed."
4.  Agree or disagree that "the government should spend less on benefits to the poor."
5.  "Do you think people with high incomes should pay a larger share of their income in taxes than those with low incomes, the same share, or a smaller share?"
6.  "Generally, how would you describe taxes in [country] today for those  with high incomes?  ... much too high, too high, about right, too low, much too low"
7.  "Is it just or unjust--right or wrong--that people with high incomes can buy better health care than people with lower incomes?"
8.  "Is it just or unjust--right or wrong--that people with high incomes can buy better education for their children than people with lower incomes."

There were 38 nations in this survey.   You can get a general index of views on equality by adding up the ranks on each of these questions.  The fancier approach is to perform a factor analysis and calculate factor scores, but that gives almost identical results.  The rankings, from least to most egalitarian:

NZ-New Zealand      284.5
PH-Philippines      265.0
US-United States    252.5
GB-Great Britain    244.0
ZA-South Africa     225.0
AU-Australia        224.0
NO-Norway           208.0
CZ-Czech Republic   203.5
CN-China            199.0
IL-Israel           193.0
AR-Argentina        191.0
BE-Belgium          184.5
CL-Chile            181.5
TW-Taiwan           181.0
PL-Poland           180.0
DK-Denmark          176.0
JP-Japan            171.0
ES-Spain            169.5
SE-Sweden           168.5
AT-Austria          158.0
CY-Cyprus           155.0
SK-Slovak Republic  153.0
CH-Switzerland      149.5
DE-Germany          141.5
FI-Finland          139.5
KR-South Korea      117.5
PT-Portugal         117.5
IS-Iceland          117.0
EE-Estonia          100.0
BG-Bulgaria          98.0
FR-France            97.5
TR-Turkey            82.0
HU-Hungary           79.0
RU-Russia            77.5
SI-Slovenia          73.0
LV-Latvia            69.0
HR-Croatia           66.0
UA-Ukraine           36.0

The United States is one of the least egalitarian nations, but doesn't stand out as much.  (We still rank as the least egalitarian on question 2, but not on any of the others).  Overall, Americans are only the third least egalitarian, behind New Zealand and the Philippines, and just ahead of Great Britain.  The most striking pattern is that five of the six least egalitarian nations were settled by people from the British Isles (the other is the Philippines, which was an American colony for about fifty years).  People of British descent don't necessarily make up a majority, but they had a disproportionate influence on the political history and culture of those nations. A few other interesting points are the big difference between the Czech and Slovak Republics, Norway's ranking as one of the less egalitarian nations, and  Switzerland's ranking as one of the more egalitarian. 

An interesting survey that doesn't exist

A 2011 essay in the City Journal by Luigi Zingales, a professor at the University of Chicago business school, compared attitudes towards economic inequality in the United States and other countries.  The key passage (which also appears in his new book, A Capitalism for the People):

"in a recent survey of 27 developed countries by the Pew Charitable Trusts, only one-third of Americans agreed that it was the government’s responsibility to reduce income inequality; the country with the next smallest fraction to agree was Canada, with 44 percent, and the responses rose as high as Portugal’s 89 percent. Americans do not want to redistribute income, but they do want the government to provide a level playing field: over 70 percent of Americans said that the role of government was 'to ensure everyone has a fair chance of improving their economic standing.' This belief in equality of opportunity is supported by another belief: that the system is actually fair. Sixty-nine percent of Americans in the same survey agreed with the statement 'People are rewarded for intelligence and skill,' a far larger percentage than in any other country."

The Pew web site contains no reference to this survey.  However, I was able to track down the sources, which appear to be the 1999 International Social Survey Programme, which is the source of the first and third questions, and a Pew survey which was conducted in the United States and Canada in 2009, which was the source of the second.   The percentages for all countries on the ISSP questions:

           Reward   Reduce
USA           69    33
Philippines   69    59
Australia     65    48
WGermany      65    47
EGermany      56    73
Canada        56    44
Japan         54    47
NIreland      53    64
NZealand      51    47
Austria       49    70
Britain       48    64
Portugal      44    89
Spain         41    77
Norway        38    60
Sweden        38    57
Israel        38    81
France        36    62
Cyprus        34    56
Poland        31    80
Chile         30    74
Hungary       23    79
Czech         23    69
Slovenia      20    83
Latvia        20    76
Russia         9    82
Slovakia       9    72
Bulgaria       5    81



I wouldn't characterize 69.4 percent as "far larger" than 68.8 percent (the Philippines), or even the 65 percent in Australia and West Germany.  However, the United States does stand out on both questions.  A more recent round of the ISSP (2009) includes the question on government responsibility to reduce differences in income between people with high and low incomes, and once again only 33% of Americans agreed. 

Maybe he had a point

In writing my recent posts on inflation, I recalled an obscure article I read when I was in graduate school (Tjerk Huppes, "Anomie and Inflation," in Economics and Sociology:  Towards an Integration, edited by Tjerk Huppes, 1976).  The article argued that contemporary (at the time) inflation was the result of a breakdown of norms ("anomie").  Basically, the idea was that traditional standards that people had accepted in various areas of life were breaking down, resulting in conflict, and conflict over wages and economic rewards produced inflation.  His evidence was that several "indicators" of anomie (suicide, homicide, divorce) were strongly correlated with rates of inflation over the period 1960-74.  Having taken a couple of courses in quantitative methods, I spotted the obvious statistical problem--all of the variables had a strong trend over the time period, so of course they had a high correlation.  I recall adding some more recent data, trying it again, and discovering, much to my surprise, that the apparent relationship still was there.

Now there's been a lot more time for data to accumulate, so I looked up data on homicide, divorce, and inflation from 1950 until the latest year available (2009).  Suicide is the classic measure of anomie, but it was harder to find annual data, so I left it out.  I constructed an index of "anomie" that combined homicide and divorce, and regressed inflation on anomie and unemployment.  With a correction for first-order autocorrelation (basically, inertia in everything else that affects inflation, here are the results:

constant  2.52

         (0.80)

anomie    1.31

         (0.31)

unemp    -0.51

         (0.20)

rho       0.61

         (0.10)

So there is very strong evidence of a relationship between anomie and inflation (plus pretty strong evidence of a traditional Phillips curve relationship between unemployment and inflation).  Of course, this is a simplistic model, but when you have an apparent relationship that's this strong you have to suspect there's really something there. 

Is the stock market fair?

In 2002, a Gallup/CNN/USA Today poll asked "Do you think the stock market--is fair to all investors, giving everyone an equal chance to make money or do you think the stock market unfairly benefits rich investors at the expense of average Americans?"  

38% said it was fair to all, 52% that it unfairly benefited rich investors, and 10% didn't know.  A CBS News poll in May 2010 asked the same question.  This time, the numbers were 23% fair, 64% favors the rich, and 13% don't know.  CBS News asked the same question in November 2010, with exactly the same results:  23-64-13.  That is, there was a substantial shift towards saying that it unfairly benefits the rich.  This probably shouldn't be surprising, but given the popularity of the claim that people reacted to the recession by blaming the government rather than Wall Street, it's worth mentioning.  It would be interesting to see if the loss of confidence occurred across the board or was more concentrated in certain groups, but a breakdown isn't available for the later surveys.